Gary, it looks like the companies are winning:
Federal Court Dismisses Class Action Complaint Against Hitsgalore.com
RANCHO CUCAMONGA, Calif., Dec. 21 /PRNewswire/ -- Hitsgalore.com, Inc. (OTC Bulletin Board: HITT) announced that on December 20,
1999, District Judge Manuel L. Real of the United States District Court for the Central District of California (the "Court") granted the Company's
motion to dismiss the First Consolidated Amended Class Action Complaint filed against Hitsgalore.com in the action entitled In re
HITSGALORE.COM, INC. SECURITIES CLASS ACTION, Case No. 99-CV-5060.
On May 13, May 16 and June 11, 1999, three separate putative class action lawsuits (Case Nos. 99-5060, 99-5151 and 99-6925) were filed against
the Company, Steve Bradford and Dorian Reed claiming violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The suits were based on an alleged scheme to "artificially inflate" the price of the Company's securities during the periods
specified in the complaints. On September 20, 1999, the Court entered an order consolidating the three lawsuits into one (entitled as above) and
appointing the lead plaintiff and lead counsel for the consolidated lawsuit. Pursuant to the Court's order, on or about October 8, 1999, a single First
Amended Consolidated Class Action Complaint for the Violation of Federal Securities Laws (the "Amended Complaint") was filed by the plaintiffs in
the consolidated lawsuit.
On November 10, 1999, the Company's attorneys, Carl F. Schoeppl and Daniel J. Becka of Schoeppl & Burke, P.A. (Boca Raton, Florida), filed a
motion to dismiss the Amended Complaint on the basis that the allegations stated therein failed to state a claim for relief under the federal securities
laws. "In 1995, Congress enacted the Private Securities Litigation Reform Act ("PSLRA") in an attempt to eliminate frivolous class action lawsuits that
were being filed by plaintiffs whenever there was a significant change in the price of a company's stock, without regard to any actual culpability on the
part of the company and its officer and directors," explained Mr. Becka. The first of the three consolidated lawsuits against Hitsgalore.com was filed
only two days after the issuance of a Bloomberg article which falsely implied that the Company fraudulently failed to disclose in a February 1999 filing
with the Securities and Exchange Commission the existence of an FTC complaint brought against Dorian Reed and others relating to Internet Business
Broadcasting, Inc., an online advertising company that closed in 1997 with which Mr. Reed was associated. The Company's stock price decreased
dramatically as a result of that story.
"The PSLRA, among other things, significantly raised the pleading standards necessary to state a claim for securities fraud under Section 10(b) of the
Exchange Act and Rule 10b-5 by requiring plaintiffs to plead, in great detail, facts creating a strong inference that the defendants acted with a
fraudulent intent," said Mr. Becka. "Plaintiffs' attorneys can no longer base securities class action lawsuits on conclusory allegations and innuendo in the
hopes that they might be able to find actual evidence of fraud through the discovery process. We believe that the Amended Complaint in this case was
a perfect example of the type of insufficient pleading Congress sought to prohibit when it enacted the PSLRA," Mr. Becka added.
The Court granted the plaintiffs 20 days to amend their complaint to again attempt to plead a viable cause of action against the Company under the
securities laws. As stated by Dorian Reed, however: "We don't know what else they could possibly allege against us. They had five months from the
filing of the first lawsuit against us in May to investigate their claims and prepare their Amended Consolidated Complaint. Although the Amended
Complaint pretty much claimed that every press release and SEC filing we made during the 'Class Period' from February 17 through August 24, 1999
was 'materially false and misleading,' the Court apparently agreed with us that the plaintiffs failed to plead actual facts sufficient to support their claims
of securities fraud." The Company continues to deny that it or its officers engaged in any type of fraudulent conduct during the Class Period and intends
to continue to vigorously contest any claims to the contrary asserted in the consolidated lawsuit.
CONTACT: Carl F. Schoeppl, Esq., or Daniel J. Becka, Esq. of Schoeppl & Burke, P.A., 561-394-8301, for Hitsgalore.com, Inc. |
